SINGAPORE (Reuters) - Turkish Petroleum Corporation (TPAO) has sold a cargo of Iraqi Basra Heavy crude loading in September at a deep discount, hit by a plunge in fuel oil margins and ample supply, several traders said.
The 1 million barrels of Basra Heavy crude loading on Sept. 6 was sold last week to BB Energy at a discount of at least $2 to its official selling price (OSP), they said.
That compared with a premium of more than $1.60 a barrel to OSP when Iraq’s Oil Marketing Company (SOMO) sold 2 million barrels of September-loading Basra Heavy to Petro Diamond via a tender that closed on Aug. 9.
Traders said the loading date for TPAO’s cargo was too prompt while demand for the crude, which has a high sulfur content and produces mostly fuel oil when processed by a refinery, was tepid due to recent poor fuel oil cracks.
Fuel oil margins plunged 300% from end-July to mid-August, dragging down overall refining margins in Asia.
Also, Iraq’s SOMO allocated more Basra Heavy crude to upstream partners in September, traders said.
The volume of Basra Heavy crude without a fixed destination was at 7-8 million barrels for September, 3-4 million barrels more than the previous month, one of the traders said.
TPAO and SOMO could not be immediately reached for comment. BB Energy declined to comment.
Reporting By Shu Zhang and Florence Tan, Additional Reporting by Can Sezer; Editing by Rashmi Aich